(REIT) Financial Report for the Fiscal Period Ended February 2023
April 14, 2023
Listing: Tokyo Stock Exchange
URL: https://www.s-reit.co.jp/en/

REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Asset Management Company:
Representative:
Contact:

Sankei Building Asset Management Co., Ltd.
Yuichi Ota, President and Chief Executive Officer
Atsushi Mukai, Director and Chief Finance & IR Officer
TEL: +81-3-5542-1316

Scheduled date of submission of semiannual securities report:
Scheduled date of commencement of distribution payment:

May 29, 2023
May 25, 2023

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for the Fiscal Period Ended February 2023 (from September 1, 2022, to February 28, 2023)(1) Management Status(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating income
Ordinary income
Net income
million yen%
million yen%
million yen%
million yen%
Fiscal period
2,891
(4.5)
1,243
(23.7)
1,077(27.0)
1,076(27.0)
ended Feb. 2023
ended Aug. 2022
3,028
9.0
1,630
5.8
1,476
6.0
1,475
6.0

yen

%

Ratio of ordinary income
to total assets
%

2,304

2.1

1.0

37.3

3,158

2.9

1.4

48.7

Net income per unit
Fiscal period
ended Feb. 2023
ended Aug. 2022

Return on equity

Ratio of ordinary income
to operating revenue%(Note) Net income per unit is calculated by dividing net income by the daily weighted average number of investment units (fiscal period ended August 2022:
467,099 units; fiscal period ended February 2023: 467,099 units)(2) Distribution
Distribution per
Total distribution
unit
Distribution in Total distribution(excluding(excludingexcess of earnings
in excess of
distribution in
distribution in
per unit
earnings
excess of earnings)
excess of earnings)
Fiscal period
ended Feb. 2023
ended Aug. 2022

Ratio ofdistribution
to net assets

Payout ratioyenmillion yen

yenmillion yen

%

%

2,305

1,076

-

-

100.0

2.1

3,158

1,475

-

-

100.0

2.9

(3) Financial Position

Fiscal period
ended Feb. 2023
ended Aug. 2022

Total assets
million yen

Net assets
million yen

105,828
106,553

Equity ratio%

Net assets per unit
yen

50,512

47.7

108,140

50,91047.8

108,993(4) Cash Flows

million yen

million yen

million yen

Cash andcash equivalents
at end of period
million yen

1,310

(408)

(1,474)

8,306

2,504

(78)

(1,790)8,878Cash flows fromoperating activities
Fiscal period
ended Feb. 2023
ended Aug. 2022

Cash flows frominvesting activities

Cash flows fromfinancing activities

2. Operating Forecasts for the Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023) andOperating Forecasts for the Fiscal Period Ending February 2024 (from September 1, 2023, to February 29, 2024)(% figures are the rate of period-on-period increase (decrease))
Operating revenue

million yen

Operating income% million yen

Ordinary income% million yen

Net income% million yen

Distribution per unit
(excluding
Distribution in excess
distribution inof earnings per unit
excess of
earnings)
%
yen
yen

Fiscal period
2,849
(1.5)
1,315
5.8
1,111
3.2
1,110
3.2
2,377
ending Aug. 2023
2,799
(1.8)
1,175
(10.6)
958(13.8)
957(13.8)
2,050
ending Feb. 2024
(Reference) Forecast net income per unit (Forecast net income ÷ Forecast total number of investment units issued and outstanding at
end of period)
Fiscal period ending August 2023: 2,376 yen Fiscal period ending February 2024: 2,050 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the total number of investment units issued and outstanding
as of the date of this document of 467,099 units.

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued andFiscal period
Fiscal period
outstanding (including treasury investment units)
467,099 units
467,099 units
ended Aug. 2022
ended Feb. 2023
at end of period
Fiscal period
ii. Number of treasury investment units at end of
Fiscal period
0 units
0 units
periodended Aug. 2022
ended Feb. 2023
(Note) For the number of investment units serving as the basis for calculation of earnings per unit, please refer to “Notes on Per
Unit Information” on page 23.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Special remarks
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023)
and Fiscal Period Ending February 2024 (from September 1, 2023, to February 29, 2024)” on page 7.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
Table of Contents
1. Management Status ...................................................................................................................................................................... 2(1) Management Status ............................................................................................................................................................... 2(2) Investment Risks .................................................................................................................................................................... 8
2. Financial Statements ..................................................................................................................................................................... 9(1) Balance Sheet ........................................................................................................................................................................ 9(2) Statement of Income and Retained Earnings ....................................................................................................................... 11(3) Statement of Changes in Unitholders’ Equity ...................................................................................................................... 12(4) Statement of Cash Distributions .......................................................................................................................................... 13(5) Statement of Cash Flows...................................................................................................................................................... 14(6) Notes on the Going Concern Assumption ............................................................................................................................ 15(7) Notes on Matters Concerning Significant Accounting Policies ............................................................................................. 15(8) Notes to the Financial Statements ....................................................................................................................................... 16(9) Changes in Total Number of Investment Units Issued and Outstanding .............................................................................. 24
3. Reference Information ................................................................................................................................................................ 25(1) Information on Price of Assets Under Management, Etc. .................................................................................................... 25(2) Capital Expenditures for Real Estate Held ............................................................................................................................ 30-1-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023

1.

Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.
Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trusts Act”) with Sankei Building Asset Management Co., Ltd. (hereinafter,
the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000 units) on
November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article 187 of theInvestment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto Local Finance
Bureau). Later, SANKEI REAL ESTATE was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock
Exchange, Inc. on March 12, 2019 (TSE code: 2972).
As of the last day of the fiscal period under review (February 28, 2023), the total number of investment units issued andoutstanding was 467,099 units and unitholders’ capital (net) was 49,435 million yen.
ii.

Management Environment
In the fiscal period under review (fiscal period ended February 28, 2023), although the Japanese economy continued tobe affected by COVID-19, movement toward normalization of the economy progressed, and a new normal assuming livingwith COVID-19 is becoming established. Meanwhile, expansion of demand due to overseas economic recovery, a rise in
prices backed by the invasion of Ukraine by Russia, high interest rates and fluctuations in foreign exchange rates brought
about the first rise in prices in Japan in decades. In addition, conditions remain uncertain such as the possibility of COVID19 infection trends, outcomes of the prolonged invasion of Ukraine and the success or failure of overseas monetary policy
being factors in the supply of goods being restricted again or pushing down the economy.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as the primary
investment target, movements to cancel lease agreements continued due to factors such as the consolidation of locations
and the reduction of fixed expenses (rent payments, etc.), and cases of decisions to relocate being withheld or taking time
have been seen. The vacancy rate remained the same or continued to rise while rents declined slightly or remained thesame in Tokyo, Osaka and Fukuoka where SANKEI REAL ESTATE’s portfolio assets are located. With regard to the hotel
market in which SANKEI REAL ESTATE invests as sub assets, the total number of guests and room occupancy rates are on apath of steady recovery according to the Overnight Travel Statistics Survey by the Japan Tourism Agency, and although theyremain below its peak, inbound demand is expected to further expand.

iii.

Management Performance
SANKEI REAL ESTATE did not acquire or sell any assets in the fiscal period under review. The portfolio of SANKEI REALESTATE as of the end of the fiscal period under review consisted of 14 properties with an asset size (total acquisition price(Note 1)) of 96,625 million yen, the same as that in the previous fiscal period.
The main factor in management performance as of the last day of the fiscal period under review was cancellations of major
tenants, and the occupancy rate (Note 2) of the 14 portfolio properties stood at 93.4%, and operating revenue from realestate rent business was 2,891 million yen, 4.5% lower than that at the end of the previous fiscal period. The appraisal
value as of the last day of the fiscal period under review was 104,232 million yen.
SANKEI REAL ESTATE has sought to improve satisfaction through reinforcement and enhancement of relations with existing
tenants, aiming at expansion of revenue and stable growth of earnings from assets under management as in the previous
fiscal period. For existing tenants approaching contract renewal, efforts were made to limit rent reductions as much as
possible and prevent the occurrence of vacancies through careful efforts based on the condition of the COVID-19 pandemic
and trends of the rental market. We recognize the filling of vacancies caused by cancellations by major tenants in someassets under management as the most important issue and are working ardently on leasing activities. In addition, repairs
and capital expenditures were narrowed down to those that contribute to maintenance and improvement of thecompetitiveness of the assets under management.
The number of requests for rent decrease, deferment of rent payment, etc. due to the spread of COVID-19 from sometenants occupying office buildings that are assets under management continued to decrease compared with when thefirst state of emergency was declared in April 2020, and the impact on management performance in the fiscal period underreview is minimal because the assets under management mainly have office tenants. In addition, the two hotel properties
held by SANKEI REAL ESTATE (Hotel Intergate Tokyo Kyobashi and Hotel Intergate Hiroshima) finally had guest room
occupancy rates increase due to the recovery of inbound demand, and although they were subject to the impact associatedwith COVID-19, the content of contracts with fixed rent based on the current contract also contributed to the stability of
portfolio revenue for rent business revenue in the fiscal period under review.
SANKEI REAL ESTATE, along with the Asset Management Company, intends to continue to conduct management withconsideration for ESG, meaning the Environment, Social and Governance, for the purpose of sustainability of society andincreasing the medium- to long-term unitholder value based on the “Sustainability Policy” in the Asset Management
Company’s management guidelines.
SANKEI REAL ESTATE reacquired DBJ Green Building certification for two offices (S-GATE NIHONBASHI-HONCHO and S-GATE
AKIHABARA) in September 2022. It also acquired 2 Star and Green Star ratings in October 2022 in the GRESB Real Estate
Assessment, a global investment benchmark established as a tool for use in selection of and dialogue with investment
destinations by measuring ESG considerations in individual real estate companies and funds. In addition, SANKEI REALESTATE acquired Building-Housing Energy-efficiency Labeling System (BELS) certification for two hotel properties in
December 2021.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
Furthermore, in March 2023, the Asset Management Company expressed its support for the recommendations of the Task
Force on Climate-related Financial Disclosures (“TCFD”) and joined the TCFD Consortium, a group of domestic companies
that supports the TCFD recommendations.
(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in each sale and purchaseagreement for the acquired assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption
tax, local consumption tax and the various expenses required for the acquisition. The same shall apply hereinafter.
(Note 2) “Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area
and total leased area, each total is calculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in eachportfolio property.

iv.

Overview of Fund Procurement
In the fiscal period under review, 5,900 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking
Corporation, Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited, Shinsei Bank, Limited (now SBI Shinsei
Bank, Limited), and Resona Bank, Limited. through a loan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui Banking
Corporation as the arrangers on September 5, 2022, to repay long-term loans of 5,900 million yen due for repayment on
September 5, 2022. The loan was made with a period of 4.5 years and fixed interest rate, thereby promoting extension of
the average time to maturity, making the ratio of fixed-rate debt 100%, and staggering of maturities of interest-bearing
liabilities.
As a result, as of the end of the fiscal period under review, the balance of loans outstanding was 50,200 million yen andthe ratio of interest-bearing liabilities to total assets (hereinafter, “LTV ratio”) was 47.4%.

v.

Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating
revenue of 2,891 million yen, operating income of 1,243 million yen, ordinary income of 1,077 million yen, and net incomeof 1,076 million yen.
Concerning distribution, in accordance with SANKEI REAL ESTATE’s cash distribution policy (Article 36 of the articles ofincorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included indeductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the Act
on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, thedecision was made to distribute 1,076,663,195 yen, which is the entire amount of unappropriated retained earnings,
excluding fractions of distribution per unit of less than 1 yen. This resulted in distribution per unit of 2,305 yen.

(Outlook for the Next Fiscal Period)i.
General Management Outlook
While the economy is expected to recover as a new normal assuming living with COVID-19 comes about, the environment
will likely continue to be one in which downside risks to the Japanese and overseas economies brought about by rising
prices starting in Europe and the US triggered by factors such as an imbalance in supply and demand amid global economic
recovery and the prolongation of Russia’s invasion of Ukraine, rising interest rates and fluctuation in exchange rates, andthe impact on financial and capital markets warrant close attention.
In the office building market, vacancy rates have risen and rents have continued to fall or remain the same. While thenormalization of social and economic activities progresses as the impact of COVID-19 is alleviated, it is necessary tomonitor future trends in office demand due to ongoing moves to reduce fixed expenses (rent payments, etc.)
accompanying changes in work styles and downside risk to economies. With regard to the assets held by SANKEI REALESTATE, there are concerns about progress in consolidation of locations and reduction of office space due to the impact ofincreased telecommuting such as working from home and the intentions to reduce fixed expenses (rent payments, etc.).
Although a large volume of new supply is expected especially in central Tokyo in 2023, it has not had a significant impact
on SANKEI REAL ESTATE’s assets at this point in time, but trends in the office building market will continue to be monitored.
Furthermore, with regard to the fuel procurement costs that are a cause of rising utilities expenses, relationships withtenants will be further reinforced and consultations and responses will be continued as required, while closely monitoring
tenants’ business performance, trends, etc.
In terms of the hotel market, domestic travelers and business travelers are expected to increase with the recovery in socialand economic activities. A rapid inflow has been recorded concerning the acceptance of foreign tourists since restrictions
were lifted last October, and although conditions remain below the peak level, further expansion is expected. A moderate
operating environment is foreseen for also the two hotel properties held by SANKEI REAL ESTATE, continued stable revenue
is expected as GRANVISTA Hotels & Resorts Co., Ltd., which is a tenant of the two properties and a wholly owned subsidiaryof SANKEI REAL ESTATE’s sponsor, The Sankei Building Co., Ltd. (hereinafter, “Sankei Building” or “Sponsor”), continues topay fixed rent based on the fixed-term building lease agreement.
(A) External Growth Strategy
While carefully assessing the economic impact of the spread of COVID-19, the real estate investment market
conditions, and other factors, SANKEI REAL ESTATE will continue to maintain external growth through acquisition ofSankei Building’s portfolio properties as well as properties held by third parties by leveraging the sourcing capabilities
of Sankei Building through full utilization of sponsorship support.
In external growth, we will conduct diversified investment conscious of the balance of the portfolio matrix such asarea and yield and strive to improve the profitability and stability of the portfolio.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(B) Internal Growth Strategy
SANKEI REAL ESTATE aims for steady internal growth through reinforcement of the relations with existing tenants andimprovement in tenant satisfaction. Specifically, we will attempt to raise rents upon contract renewal if there is asignificant deviation from market rent and continue to implement strategic leasing such as activities to extend thecancellation notification period from tenants and disperse end dates of rental contracts from the viewpoint oftermination risk for properties where the end dates of multiple tenants are the same. Furthermore, we will continue
to take proactive measures to improve tenant satisfaction such as improving the quality of hygiene and planned
implementation of maintenance and repairs.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions
ranging from real estate planning and development to lease-up, operation, and management through collaboration
within the Sankei Building Group with Sankei Building at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable
growth of earnings from assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relations inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs, and other factors and carefully
examining them.
(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider the environment by
periodically verifying the validity of operations, management level, and costs of assets under management. In
doing so, the balance with the market competitiveness of assets under management and perspective of
maintaining and improving tenant satisfaction are taken into consideration.
(e) Conduct investment conscious of ESG, such as reduction of the environmental impact of assets undermanagement and cooperation with external stakeholders.
(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering agility of financing
activities, stability of cash flows, and other matters in order to secure stable earnings and steady growth of assets
under management over the medium to long term.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% inprinciple (however, the LTV ratio may temporarily exceed the upper limit for the purpose of new asset acquisition,etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50% during normal operations.
(a) Equity financing
Issuance of new investment units shall be performed in an agile manner with due consideration to investment
unit dilution while comprehensively taking into account capital market trends, financial environment, timing ofacquisition of real estate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and otherfactors.
(b) Debt financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationships, andsecurity, and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not,fees, and other terms and conditions of procurement of interest-bearing liabilities.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
ii.

Significant Subsequent Events
Not applicable.

(Reference Information)(A) Borrowing of Funds
SANKEI REAL ESTATE conducted the following borrowing of funds on March 30, 2023, to use as part of the funds foracquisition and incidental expenses upon acquisition of the real estate trust beneficiary rights of two properties as
described in “(Reference Information) (B) Acquisition of Assets” below.
Loan amount
Repayment
Category
LenderInterest rate (Note)
Maturity date
Remarks(million yen)methodShorttermloans

Mizuho Bank, Ltd.

6,800

Base rate (JBA 1-month
Japanese Yen TIBOR) +0.35%

March 30,2024

Lump-sum Unsecured/
repayment at
Nonmaturity guaranteed(Note) Base rate will be: JBA Japanese Yen TIBOR announced by JBA TIBOR Administration for the interest calculation period as of two business days
prior to the immediately preceding interest payment date (the drawdown date in the case of the first interest calculation period). For the JBA
Japanese Yen TIBOR, please check the website of JBA TIBOR Administration (https://www.jbatibor.or.jp/english/rate/).

Furthermore, the 3,700 million yen of long-term loans due for repayment on March 13, 2023, was refinanced on thesame day as follows.
Loan amount
Repayment
Category
LenderInterest rate
Maturity date
Remarks(million yen)methodMizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Development Bank of Japan
Long- Inc.
Lump-sum Unsecured/
September 13,
term
Mizuho Trust & Banking Co.,
3,700
1.02763%
repayment at
Non2027loans
Ltd.
maturity guaranteed
Sumitomo Mitsui Trust Bank,
LimitedSBI Shinsei Bank, Limited
Resona Bank, Limited(B) Acquisition of Assets
SANKEI REAL ESTATE conducted the following acquisition of real estate trust beneficiary rights of two properties (totalacquisition price: 6,642 million yen) on March 31, 2023.
Acquisition
Asset Property
Acquisition
price
Acquisition
Property nameLocation
Sellertype
numberasset(million yen)date
(Note)
Real estate
OfficeS-GATE AKASAKA
Minato-ku,
trust
The Sankei Building March 31,
A-10
1,400
buildings(additional acquisition)TokyobeneficiaryCo., Ltd.
2023
right
i. The Sankei
Real estate
Building Co., Ltd.
Sub
i. 3,669.4
Settsu-shi,
trust
(70%)
March 31,
B-3
SANKEILOGI Settsu
ii. 1,572.6
assetsOsaka
beneficiaryii. JA Mitsui Leasing
2023
Total 5,242
rightTatemono Co., Ltd.
(30%)
Total (2 properties)
6,642(Note) “Acquisition price” is the sale and purchase price of each trust beneficiary right stated in the trust beneficiary right transfer agreement foreach acquired asset, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption
tax and the various expenses required for the acquisition. Furthermore, the acquisition price for S-GATE AKASAKA is the figure equivalent to
the 20% quasi co-ownership interest additionally acquired by SANKEI REAL ESTATE. As a result of the additional acquisition, SANKEI REALESTATE holds 100% of the trust beneficiary right in S-GATE AKASAKA.

-5-SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending August 2023 (from March 1, 2023, to August 31,2023) and fiscal period ending February 2024 (from September 1, 2023, to February 29, 2024) are as follows:
Operatingrevenue

OperatingincomeOrdinary
incomeDistribution per unit
Distribution in
Net income (excluding distribution in excess of earnings
excess of earnings)
per unit

million yen
million yen
million yen
million yen
yenyen
Fiscal period
2,849
1,315
1,111
1,110
2,377
ending Aug. 2023
ending Feb. 2024
2,799
1,175
958
957
2,050
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the Operating
Forecasts for the Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023) and Fiscal Period Ending
February 2024 (from September 1, 2023, to February 29, 2024)” presented below.
(Note) The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue, operating
income, ordinary income, net income, distribution per unit, and distribution in excess of earnings per unit may vary due to changes in thecircumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending August 2023 (from March 1, 2023, to August 31, 2023)
and Fiscal Period Ending February 2024 (from September 1, 2023, to February 29, 2024)
Item
Accounting period

Assets undermanagement

Operating revenue

Operating expenses

Non-operating
expenses

Interest-bearing
liabilities

Assumptions
・Fiscal period ending August 2023 (9th fiscal period) (from March 1, 2023, to August 31, 2023) (184 days)
・Fiscal period ending February 2024 (10th fiscal period) (from September 1, 2023, to February 29, 2024)(182 days)
・The assumption is that the portfolio will be comprised of the real estate and real estate trust beneficiaryrights (total of 15 properties) held by SANKEI REAL ESTATE as of the date of this document (hereinafter,
the “current portfolio assets”).
・There are no matters decided as of the date of this document, but it is assumed that the properties will
be disposed in the fiscal period ending August 2023 and fiscal period ending February 2024.
・Rent business revenue of the current portfolio assets is calculated by taking into account various
factors, such as lease agreements that have been concluded and are valid as of the date of thisdocument, tenant trends and market trends.
・For the fiscal period ending August 2023, gain on compensation for damages resulting from usage withdelay of vacation by tenants of Shinagawa Seaside TS Tower will be recorded.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・A gain on sale of real estate is expected to be recorded due to the sale of property for the fiscal period
ending August 2023 (263 million yen) and fiscal period ending February 2024 (359 million yen). The
gain on sale of real estate may vary depending on whether the sale is made, the disposition price, thetiming of the disposition and other conditions.
・Of operating expenses, the main components are as follows:(Unit: million yen)
Fiscal period ending Fiscal period ending
Aug. 2023
Feb. 2024
Total expenses related to rent business
1,226
1,303
Outsourcing expenses

251

282

Utilities expenses

219

234

Repair expenses
Property taxes

89
312

110
309

Depreciation

325

336

Other expenses related to rent business [Total]
307
321
Asset management fee
241242
・Of expenses related to rent business, which are the main operating expenses, the expenses other thandepreciation are calculated on the basis of historical data and by taking into consideration the factors
causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
・In general, non-current asset tax, city planning tax, etc. are calculated on a pro rata basis andreimbursed at the time of property acquisition with the previous owner upon transactions of realestate, etc. At SANKEI REAL ESTATE, the amount equivalent to the reimbursement is included in the costof acquisition and thus not expensed in the business period in which the property acquisition date falls
in the case of the properties for which such reimbursement is made at the time of transaction.
・Repair expenses for buildings is the amount estimated based on medium- to long-term repair plans
formulated by the Asset Management Company. However, repair expenses possibly increasing inamount or additionally arising from unforeseeable factors may result in repair expenses differing
materially from the forecast amount.
・As interest expenses and other borrowing-related expenses, 197 million yen is assumed for the fiscal
period ending August 2023 and 209 million yen for the fiscal period ending February 2024.
・As amortization of investment unit issuance expenses, 6 million yen is assumed for the fiscal period
ending August 2023 and 6 million yen for the fiscal period ending February 2024.
・The assumption is that total interest-bearing liabilities will be 57,000 million yen at the end of the fiscal
period ending August 2023 and 57,000 million yen at the end of the fiscal period ending February 2024.
・The assumption is that there will be no change in the balance of loans outstanding other than the above
through to the end of the fiscal period ending February 2024.
・LTV ratio is expected to be 50.6% at the end of the fiscal period ending August 2023 and 50.3% at theend of the fiscal period ending February 2024. LTV ratio is calculated by the following formula androunded to one decimal place.
LTV ratio = Total interest-bearing liabilities / Total assets × 100-7-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
Item

Number of investment
units issued andoutstanding

Distribution per unit
(excluding distribution
in excess of earnings)

Assumptions
・The assumption is total number of investment units issued and outstanding as of the date of thisdocument of 467,099 units and that there will be no change in the number of investment units due toissuance of new investment units, etc. through to the end of the fiscal period ending February 2024.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast
total number of investment units issued and outstanding at the end of the fiscal period ending August2023 and fiscal period ending February 2024 of 467,099 units.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumptionthat distribution of earnings will be in accordance with the policy on distribution of cash provided in
SANKEI REAL ESTATE’s articles of incorporation.
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, suchas fluctuation in rent business revenue accompanying change in assets under management, change intenants or other event, or incurrence of unexpected repairs.

Distribution in excess of・No cash distribution in excess of earnings is planned to be made at this point in time.
earnings per unit
・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange, Inc., rules provided by The Investment
Other
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.
(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the semiannual securities report(submitted on November 29, 2022).

-8-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
7th fiscal period(as of Aug. 31, 2022)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Lease and guarantee deposits
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance costs
Total deferred assets
Total assets-9-

8th fiscal period(as of Feb. 28, 2023)

5,575,535
3,303,184
62,70271,80178
9,013,302

5,208,842
3,097,656
64,47862,7958,433,772

181,978(22,182)
159,795
544
(53)
490
2,457,766
18,769,170(1,592,660)
17,176,510
71,171(3,517)67,654
11,302(1,698)
9,603
49,525(11,769)
37,756
77,433,848
56,722
97,400,148

182,520(25,525)
156,995
544
(67)
476
2,457,766
18,955,810(1,879,113)
17,076,697
71,171(4,558)66,613
14,330(2,290)12,04071,817(16,419)
55,397
77,433,848
945
97,260,780

2,953
2,953

2,013
2,013

103,157
15
10,000113,173
97,516,274

103,557
12
10,000113,569
97,376,363

24,09924,099106,553,676

18,075
18,075
105,828,211

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(Unit: thousand yen)
7th fiscal period(as of Aug. 31, 2022)
Liabilities
Current liabilities
Operating accounts payable
Long-term loans due within one year
Accounts payable - otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term loans
Lease and guarantee deposits received
Lease and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital (net)
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets- 10 -

8th fiscal period(as of Feb. 28, 2023)

244,965
9,600,000
308,770
44,831
926
171,838
447,828
6,036
10,825,198

347,1039,600,000
288,400
50,743855
38,660449,764
676
10,776,204

40,600,000
88,2374,129,413
44,817,651
55,642,849

40,600,000
88,166
3,851,485
44,539,651
55,315,856

49,442,685(7,136)49,435,549

49,442,685(7,136)49,435,549

1,475,277

1,076,805

1,475,277
50,910,827*1 50,910,827
106,553,676

1,076,805
50,512,354*1 50,512,354
105,828,211

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(2) Statement of Income and Retained Earnings(Unit: thousand yen)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022
Operating revenue
Rent business revenue
Other rent business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distributions payable
Insurance claim income
Interest on refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Amortization of investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Net income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)- 11 -

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

*1 2,516,558*1 2,452,313*1 511,493*1 439,634

3,028,051

2,891,948*1 1,076,927*1 1,338,956

265,992
2,100
7,460
3,600
41,722
1,397,803
1,630,247

247,055
2,092
8,020
3,600
48,325
1,648,050
1,243,897

41
279
0
321

41
584
930
285
1,842

100,93147,4606,024
26
154,444
1,476,124
1,476,124
932
(5)
927
1,475,197
80
1,475,277

114,796
47,427
6,024
168,248
1,077,491
1,077,491
861
3
865
1,076,626
178
1,076,805

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(3) Statement of Changes in Unitholders’ Equity
7th fiscal period (from March 1, 2022, to August 31, 2022)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodSurplus
Deduction
Total
Unitholders’fromUnitholders’
Unappropriatedunitholders’capitalunitholders’ capital (net)retained earnings Total surplus
equitycapital(undisposed loss)

Total net

49,442,685

1,391,567

1,391,567

50,827,117

50,827,117

Distributions of surplus(1,391,487)(1,391,487)(1,391,487)(1,391,487)

Net income

1,475,197

1,475,197

1,475,197

1,475,197-

83,70983,70983,70983,709(7,136) 49,435,549

1,475,277

1,475,277

50,910,827

50,910,827

Total changes in items
during period
Balance at end of period*1 49,442,685(7,136) 49,435,549

assets-

8th fiscal period (from September 1, 2022, to February 28, 2023)(Unit: thousand yen)
Unitholders’ equity

Balance at beginning of
periodChanges in items during
periodSurplus
Deduction
Total
Unitholders’fromUnitholders’
Unappropriatedunitholders’capitalunitholders’ capital (net)retained earnings Total surplus
equitycapital(undisposed loss)

Total net
assets49,442,685

1,475,277

1,475,277

50,910,827

50,910,827

Distributions of surplus(1,475,098)(1,475,098) (1,475,098)(1,475,098)

Net income

1,076,626

1,076,626

1,076,626

1,076,626-(398,472)(398,472)(398,472)(398,472)(7,136) 49,435,549

1,076,805

1,076,805

50,512,354

50,512,354

Total changes in items
during period
Balance at end of period*1 49,442,685(7,136) 49,435,549-- 12 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(4) Statement of Cash Distributions(Unit: yen)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

I. Unappropriated retained earnings

1,475,277,574

1,076,805,124

II. Amount of distribution

1,475,098,642

1,076,663,195[Amount of distribution per unit][3,158][2,305]

III.Retained earnings carried forward

178,932

141,929

Method of calculation of amount of
distribution

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,475,098,642 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
not in excess of unappropriatedretained earnings, as distribution of
earnings. The distribution in excess ofearnings specified in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

In accordance with the policy on
distribution specified in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amountof distribution shall be limited to theamount of net income in excess of theamount equivalent to 90% of
distributable profit, as stipulated in
Article 67-15 of the Act on Special
Measures Concerning Taxation. Basedon such policy, the decision was madeto distribute 1,076,663,195 yen, whichis the largest integral multiple of thetotal number of investment units
issued and outstanding (467,099 units)
not in excess of unappropriatedretained earnings, as distribution of
earnings. The distribution in excess ofearnings specified in Article 36,
Paragraph 2 of SANKEI REAL ESTATE’s
articles of incorporation will not be
made.

- 13 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(5) Statement of Cash Flows(Unit: thousand yen)
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022
Cash flows from operating activities
Net income before income taxes
Depreciation
Amortization of investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses
Decrease (increase) in other assets
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Proceeds from lease and guarantee deposits received
Refund of lease and guarantee deposits received
Proceeds from lease and guarantee deposits received
in trust
Refund of lease and guarantee deposits received intrust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Repayments of short-term loans
Proceeds from long-term loans
Repayments of long-term loans
Distributions paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 14 -

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

1,476,124
310,7636,024(41)
100,931
27,164

1,077,491
297,033
6,024(41)
114,796(1,775)389,377-(10,343)
116,727
64,742
171,838(37,563)(5,319)(9,818)(78)
2,600,531
41(94,905)(821)
2,504,846

9,006
77,214(22,151)(133,178)
1,936(5,360)(399)
78
1,420,674
41(108,884)(932)
1,310,899(2,708)(102,914)
595
(331)

(542)
(130,867)
632
(703)

110,219

74,547(83,190)(351,923)(78,330)(408,856)(400,000)
5,600,000(5,600,000)(1,390,093)(1,790,093)
636,421
8,242,298*1 8,878,719

5,900,000(5,900,000)(1,474,263)(1,474,263)(572,220)8,878,719
8,306,499

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of noncurrent assets

2.

Accounting for deferred assets

3.

Standards for revenue andexpense recognition

4.

Scope of cash (cash and cash
equivalents) in the statement ofcash flows

5.

Other significant matters related
to the basis for preparation of
the financial statements(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful lives of major property,
plant and equipment is as follows:
Buildings
3–65 years
Structures
6–59 years
Machinery and equipment
8-10 years
Tools, furniture and fixtures
4-10 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
Investment unit issuance costs
They are amortized by the straight-line method over 3 years.
(1) Standards for revenue recognition
The details of performance obligations concerning revenue from contracts withcustomers of SANKEI REAL ESTATE and the timing when the performance obligations
are normally satisfied (the normal time to recognize revenue) are as follows.
i. Sale of real estate, etc.
Revenue is recognized for the sale of real estate at the time the buyer who is acustomer gains control of the real estate, etc. through the performance ofdelivery obligations specified in a contract on the sale of real estate.
ii. Utilities reimbursement
Revenue is recognized for utilities reimbursement according to the supply ofelectricity, water, etc. to tenants who are customers based on the content oflease agreements for real estate and incidental agreements. For the utilities
reimbursement for which SANKEI REAL ESTATE is deemed to be an agent, the net
amount after deducting the amount to be paid to another party from the amountreceived from the other party as charges for electricity, gas, etc. provided by said
party is recorded as revenue.
(2) Accounting for non-current asset tax, etc.
For non-current asset tax, city planning tax, depreciable asset tax, etc. on real estateor trust beneficiary rights of real estate, the tax levied corresponding to the calculation
period is recorded as expenses related to rent business. Furthermore, the amountequivalent to non-current asset tax, etc. in the initial fiscal year paid by SANKEI REALESTATE upon acquisition of real estate or trust beneficiary rights of real estate isincluded in the cost of acquisition of the real estate, etc. and not recognized as
expenses. The amount equivalent to non-current asset tax, etc. included in the cost of
acquisition of real estate, etc. was nil in the previous fiscal period. The amountequivalent to non-current asset tax, etc. included in the cost of acquisition of realestate, etc. was nil in the fiscal period under review.
Cash and cash equivalents in the statement of cash flows comprise cash on hand and cashin trust, demand deposits and deposits in trust, and short-term investments with a maturityof three months or less from the date of acquisition that are readily convertible to cash andthat are subject to an insignificant risk of changes in value.
Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets held, allaccounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of the balance
sheet and the statement of income and retained earnings.
Furthermore, the following material items of the trust assets recognized in the relevant
account item are separately listed on the balance sheet.
i.
Cash and deposits in trustii. Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools,
furniture and fixtures in trust; Land in trust; Construction in progress in trustiii. Lease and guarantee deposits received in trust- 15 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: thousand yen)
7th fiscal period
8th fiscal period(as of Aug. 31, 2022)(as of Feb. 28, 2023)
50,00050,000[Notes to the Statement of Income and Retained Earnings]*1. Breakdown of operating income (loss) from real estate rent business7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

(Unit: thousand yen)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

A. Operating revenue from real estate rent
business
Rent business revenue
Rental revenue
Common area maintenance revenue
Total rent business revenue
Other rent business revenue
Utilities reimbursement
Parking revenue
Termination penalties
Income from work to restore to theoriginal state
Other rental revenue
Total other rent business revenue
Total operating revenue from real estate
rent business
B. Operating expenses from real estate rent
business
Expenses related to rent businessOutsourcing expenses
Utilities expenses
Property taxes
Land rent
Repair expenses
Insurance premium
Trust fee
Depreciation
Other expenses related to rent
business
Total expenses related to rent businessTotal operating expenses from realestate rent business
C. Operating income (loss) from real estate
rent business [A−B]

2,381,126
135,432

2,323,174
129,138

2,516,558

2,452,313

121,659
33,939346,974

130,668
34,048
10,466-

254,855

8,919
511,493

9,596
439,634

3,028,051

2,891,948

202,506
184,674
303,718
1,818
55,2305,749
3,787
309,823

231,216
214,149
300,889
1,818
271,4175,603
3,752
296,093

9,616

14,014

1,076,927

1,338,956

1,076,927

1,338,956

1,951,124

1,552,992[Notes to the Statement of Changes in Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022
Total number of investment units
authorized
Total number of investment units issued
and outstanding- 16 -(Unit: units)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

10,000,000

10,000,000

467,099

467,099

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousand yen)
7th fiscal period
8th fiscal period
From: Mar. 1, 2022
From: Sept. 1, 2022
To: Aug. 31, 2022
To: Feb. 28, 2023
Cash and deposits
Cash and deposits in trust

5,575,535
3,303,184

5,208,842
3,097,656

Cash and cash equivalents

8,878,719

8,306,499[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
7th fiscal period(as of Aug. 31, 2022)(Unit: thousand yen)
8th fiscal period(as of Feb. 28, 2023)

Due within 1 year

2,645,767

2,485,706

Due after 1 year
Total

13,446,087
16,091,854

12,893,670
15,379,376[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement shallbe in a manner that gives due consideration to the balance between agility in fund procurement and financial stability,
characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt, ratio of
fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. Upon borrowing, lenders
shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act (however,limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE arising from the concerned liabilities. No derivative transactions were conducted in thefiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
Loans are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of obligations.
Loans are exposed to the risk of inability to refinance upon becoming due for repayment, risk of rise in the interest rate
payable, etc., but the risks are mitigated by considering fund procurement that is well balanced through issuance ofinvestment units, etc. while also diversifying fund procurement sources and staggering maturities. In addition, the riskof rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watching interest rate trends andkeeping the LTV ratio under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
Certain assumptions, etc. are adopted in the calculation of the value of financial instruments. Accordingly, the concernedvalues may vary when different assumptions, etc. are adopted.

- 17 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
2. Matters concerning fair value, etc. of financial instruments
The following are the carrying amount and fair value as of August 31, 2022, and the amount of difference between these.
Notes on “cash and deposits” and “cash and deposits in trust” are omitted as the fair value approximates the carrying
amount because they are cash or settled in a short period. Furthermore “lease and guarantee deposits received” and “leaseand guarantee deposits received in trust” are omitted because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans

Fair value

9,600,000
40,600,000
50,200,000

Total liabilities

Amount of difference

9,601,711
40,274,136
49,875,848

1,711(325,863)(324,151)

The following are the carrying amount and fair value as of February 28, 2023, and the amount of difference between these.
Notes on “cash and deposits” and “cash and deposits in trust” are omitted as the fair value approximates the carrying
amount because they are cash or settled in a short period. Furthermore “lease and guarantee deposits received” and “leaseand guarantee deposits received in trust” are omitted because the amounts are immaterial.
(Unit: thousand yen)
Carrying amount(1) Long-term loans due within one year
(2) Long-term loans
Total liabilities

Fair value

Amount of difference

9,600,000

9,600,915

915

40,600,000

40,112,914(487,085)

50,200,000

49,713,829(486,170)(Note 1) Method of calculation of the fair value of financial instruments.
(1) Long-term loans due within one year; (2) Long-term loans
Of long-term loans, because those with floating interest rates reflect market interest rates in a short period of time, the fair value approximates
the book value and thus stated at that book value. However, in the case of long-term loans with fixed interest rates, the fair value is calculated
based on the present value of their future cash flows discounted over the time to maturity and at the rate adjusted for credit risks.
(Note 2) Amount of repayment of loans scheduled to be due after the end of the fiscal period (August 31, 2022)
Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,600,000

-

-

-

-

-

-

9,200,000

9,100,000

10,500,000

6,200,000

5,600,000

9,600,000

9,200,000

9,100,000

10,500,000

6,200,000

5,600,000

Long-term loans
Total

Due after
1 to 2 years

Amount of repayment of loans scheduled to be due after the end of the fiscal period (February 28, 2023)
Due within
1 yearLong-term loans due within one year

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years(Unit: thousand yen)
Due after
5 years

9,600,000

-

-

-

-

-

-

7,600,000

11,000,000

10,500,000

5,900,000

5,600,000

9,600,000

7,600,000

11,000,000

10,500,000

5,900,000

5,600,000

Long-term loans
Total

Due after
1 to 2 years[Notes on Securities]
7th fiscal period (as of August 31, 2022)
Not applicable.
8th fiscal period (as of February 28, 2023)
Not applicable.

- 18 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
[Notes on Derivative Transactions]
7th fiscal period (as of August 31, 2022)
Not applicable.
8th fiscal period (as of February 28, 2023)
Not applicable.
[Notes on Retirement Benefits]
7th fiscal period (as of August 31, 2022)
Not applicable.
8th fiscal period (as of February 28, 2023)
Not applicable.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)
7th fiscal period(as of Aug. 31, 2022)

8th fiscal period(as of Feb. 28, 2023)

15

12

15
15

12
12

Deferred tax assets
Non-deductible accrued enterprise tax
Total
Deferred tax assets, net

2. Reconciliation of significant differences between the statutory tax rate and the effective income tax rate
7th fiscal period(as of Aug. 31, 2022)
Statutory tax rate

(Unit: %)8th fiscal period(as of Feb. 28, 2023)

31.46

31.46

(31.44)(31.44)

Other

0.04

0.06

Effective income tax rate after applicationof tax-effect accounting

0.06

0.08

[Adjustments]
Deductible distribution payable[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Not applicable.

- 19 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
2. Affiliated company, etc.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Not applicable.
3. Fellow subsidiary, etc.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Not applicable.
4. Director, major individual unitholder, etc.
7th fiscal period (from March 1, 2022, to August 31, 2022)
Description ofPercentage ofrelationship
Name of
Balance
Share capitalvoting rights,
Transaction
company,
Description ofat end ofConcurrent
or investments
etc. held by
Description ofamount AccountAttributeetc. or
Locationbusiness or
periodholding of
in capital(in) SANKEItransaction(thousanditem
Businessname ofoccupation(thousandpositions,(thousand yen)
REAL ESTATE
yen)
relationshippersonyen)
etc. by(%)
directors
Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE,
President andAccounts
management
and President and Chief
fee to asset
Director Yuichi Ota
Chief Executive
265,992 payable - 292,592
Executive Officer ofmanagement
Officer ofotherSankei Building Assetcompany
Sankei Building
Management Co., Ltd.
(Note 3)
Asset
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.

8th fiscal period (from September 1, 2022, to February 28, 2023)

Attribute

Name ofcompany,
etc. orname ofpersonDescription ofPercentage ofShare capital
Balancerelationshipvoting rights,
Transactionorat end of
Description ofConcurrent
amountAccount
etc.
held
by
Descriptionofinvestments
periodLocationbusiness or
holding oftransaction (thousand
item (thousand
Business(in) SANKEI
in capital
occupation
positions,yen)relationship
REAL ESTATE(thousandyen)
etc. byyen)(%)
directors

Executive
Director of
SANKEI REAL
Payment of
Executive Director of
ESTATE, andasset
SANKEI REAL ESTATE, andPresident andAccounts
management
President and Chief
fee to asset
Director Yuichi Ota
Chief Executive
247,055 payable - 271,761
Executive Officer ofmanagement
Officer ofotherSankei Building Assetcompany
Sankei Building
Management Co., Ltd.
(Note 3)
Asset
Management
Co., Ltd.
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption tax,
etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building Asset Management Co., Ltd.,and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.
(Note 4) Transaction terms and conditions are decided based on the actual market conditions.

[Notes on Asset Retirement Obligations]
7th fiscal period (from March 1, 2022, to August 31, 2022)
Not applicable.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Not applicable.

- 20 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
7th fiscal period
8th fiscal period
From: Mar. 1, 2022
From: Sept. 1, 2022
To: Aug. 31, 2022
To: Feb. 28, 2023
Carrying amount
Balance at beginning of period
97,570,230
97,343,425
Amount of change during period
Balance at end of period
Fair value at end of period(226,804)
97,343,425
104,937,000(83,590)
97,259,835
104,232,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase in the previous fiscal period is mainly attributable to capital expenditures(83,067 thousand yen), while the amount of decrease is mainly attributable to depreciation (309,823 thousand yen). The amount of increasein the fiscal period under review is mainly attributable to capital expenditures (212,502 thousand yen), while the amount of decrease ismainly attributable to depreciation (296,093 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income and Retained Earnings.”[Notes on Revenue Recognition]
1. Information breaking down revenue from contracts with customers
7th fiscal period (from March 1, 2022, to August 31, 2022)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note)-

Utilities reimbursement

121,659

121,659

Other-

2,906,392

Total

121,659

3,028,051(Note)

Sales to external customers-

Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and the transfer of real estate,etc. subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on
Accounting of Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts
because they are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts withcustomers are revenue from the sale of real estate, etc. and utilities reimbursement.

8th fiscal period (from September 1, 2022, to February 28, 2023)(Unit: thousand yen)

Sale of real estate, etc.

Revenue from contracts with customers(Note)-

Utilities reimbursement

130,668

130,668

Other-

2,761,279

Total

130,668

2,891,948(Note)

Sales to external customers-

Rent business revenue, etc. subject to ASBJ Statement No. 13 “Accounting Standard for Lease Transactions” and the transfer of real estate,etc. subject to The Japanese Institute of Certified Public Accountants Accounting Committee Report No. 15 “Practical Guidelines on
Accounting of Transferors for the Securitization of Real Estate Utilizing Special Purpose Companies” are not included in the above amounts
because they are excluded from application of the Revenue Recognition Accounting Standard. The main revenues from contracts withcustomers are revenue from the sale of real estate, etc. and utilities reimbursement.

2. Information forming the basis for understanding revenue from contracts with customers
7th fiscal period (from March 1, 2022, to August 31, 2022)
Matters related to significant accounting policies are as stated in the notes.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Matters related to significant accounting policies are as stated in the notes.

- 21 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
3. Information on relationship between satisfaction of performance obligations based on contracts with customers and cash
flows from such contracts, and the amount and timing of revenue expected to be recognized from the next fiscal period
from contracts with customers that exist at the end of the fiscal period under review(1) Balance of contract assets and contract liabilities, etc.
(Unit: thousand yen)
8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022
Receivables from contracts with customers

26,18230,00230,00225,127

Contract assets (Balance at beginning of period)--

Contract assets (Balance at end of period)--

Contract liabilities (Balance at beginning of period)--

Contract liabilities (Balance at end of period)--(Balance at beginning of period)
Receivables from contracts with customers(Balance at end of period)(2) Transaction price allocated to remaining performance obligations
7th fiscal period (from March 1, 2022, to August 31, 2022)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
8th fiscal period (from September 1, 2022, to February 28, 2023)
Revenue is recognized for utilities reimbursement using the amount for which there is a right to claim in accordancewith section 19 of the Implementation Guidance on Accounting Standard for Revenue Recognition because there
is a right to receive an amount of consideration directly corresponding to the value for the lessee, who is acustomer, for the portion for which performance is completed by the end of the period. Therefore, the provisionsof section 80-22(2) of the Revenue Recognition Accounting Standard apply, and the transaction prices allocated toremaining performance obligations are not included in the notes.
[Notes on Segment Information, Etc.]
1. Segment information
The information is omitted since SANKEI REAL ESTATE has a single segment—the real estate rent business.
2. Related information
7th fiscal period (from March 1, 2022, to August 31, 2022)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic areai.
Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.

- 22 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.
Sony Group Corporation(Note)

Operating revenue
325,755
Not disclosed (Note)(Unit: thousand yen)
Related segment
Real estate rent business
Real estate rent businessNot disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

8th fiscal period (from September 1, 2022, to February 28, 2023)(1) Information by product and service
The information is omitted since operating revenue to external customers for a single group of products and services
exceeds 90% of operating revenue on the statement of income and retained earnings.
(2) Information by geographic area
i. Operating revenue
The information is omitted since operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income and retained earnings.
ii. Property, plant and equipment
The information is omitted since the amount of property, plant and equipment located in Japan exceeds 90% of
the amount of property, plant and equipment on the balance sheet.
(3) Information by major customer
Name of customer
GRANVISTA Hotels & Resorts Co., Ltd.
Sony Group Corporation(Note)

Operating revenue
325,755
Not disclosed (Note)(Unit: thousand yen)
Related segment
Real estate rent business
Real estate rent businessNot disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

[Notes on Per Unit Information]
7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

Net assets per unit

108,993 yen

108,140 yen

Net income per unit

3,158 yen

2,304 yen

(Note 1) Net income per unit is calculated by dividing net income by the period’s daily weighted average number of investment units (fiscal period
ended August 2022: 467,099 units; fiscal period ended February 2023: 467,099 units). In addition, diluted net income per unit is not stated,because there are no diluted investment units(Note 2) The basis for calculation of net income per unit is as follows:

7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022
Net income (thousand yen)Amount not available to common unitholders(thousand yen)
Net income attributable to common investment units(thousand yen)
Average number of investment units during period(units)[Notes on Significant Subsequent Events]
Not applicable.

- 23 -

8th fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

1,475,197

1,076,626--

1,475,197

1,076,626

467,099

467,099

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (February 28, 2023) are as follows:
Total number of investment
Unitholders’ capital (net)units issued and outstanding Remarks(thousand yen) (Note 1)(units)Date
Description
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Incorporation
Nov. 19, 2018
through private
100,000
100,000
1,000
1,000 (Note 2)placement
Capital increase
Mar. 11, 2019
through public
21,928,467
22,028,467
227,238
228,238 (Note 3)
offering
Capital increase
Apr. 10, 2019
through third-party
1,096,433
23,124,900
11,362
239,600 (Note 4)
allotment
Capital increase
Sept. 2, 2019
through public
12,777,138
35,902,038
111,619
351,219 (Note 5)
offering
Capital increase
Sept. 26, 2019
through third-party
638,862
36,540,901
5,581
356,800 (Note 6)
allotment
Capital increase
Sept. 1, 2021
through public
12,287,452
48,828,353
105,047
461,847 (Note 7)
offering
Capital increase
Sept. 29, 2021
through third-party
614,33149,442,685
5,252
467,099 (Note 8)
allotment
Cash distribution inexcess of earnings
Nov. 22, 2021
(7,136)49,435,549
467,099 (Note 9)(contribution
refund)(Note 1) The amount obtained by subtracting the deduction from unitholders’ capital from unitholders’ capital.
(Note 2) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 3) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 4) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.
(Note 5) New investment units were issued through public offering at an issue price of 118,734 yen (paid-in amount of 114,471 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 6) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 114,471 yen per unit.
(Note 7) New investment units were issued through public offering at an issue price of 121,327 yen (paid-in amount of 116,971 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 8) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 116,971 yen per unit.
(Note 9) A cash distribution in excess of earnings of 20 yen per unit (contribution refund that falls under distribution through the reduction inunitholders’ capital for tax purposes) as the cash distribution for the 5th fiscal period (ended August 2021) resolved at SANKEI REAL ESTATE’s
board of directors’ meeting held on October 15, 2021, and payment of the distribution commenced on November 22, 2021.

- 24 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
3.

Reference Information(1) Information on Price of Assets Under Management, Etc.
i. Investment Status
7th fiscal period(as of Aug. 31, 2022)
Type ofasset

Asset type

Geographic area
(Note 1)

8th fiscal period(as of Feb. 28, 2023)

Total amount
As a
Total amount
As a
held
percentage ofheldpercentage of(million yen) total assets (million yen) total assets(Note 2)(%) (Note 3)(Note 2)(%) (Note 3)

Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Real estate
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Sub assets
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated by
Office buildings
government ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Real estate inCities designated by
Sub assets
trustgovernment ordinance(excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City andNagoya City
Cities designated byHotelsgovernment ordinance(excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets
Total assets

2,618

2.5

2,615

2.5

-

-

-

-

-

-

-

-

-

-

-

-

71,70967.3

71,67767.7

10,193

9.6

10,197

9.6

8,924

8.4

8,897

8.4

3,898

3.7

3,872

3.7

8,924

8.4

8,897

8.4

3,898

3.7

3,872

3.7

97,343
9,210

91.4
8.6

97,259
8,568

91.9
8.1

106,553

100.0

105,828100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
“Core cities” refers to cities with population of 200,000 or more (excluding Greater Tokyo, Osaka City and Nagoya City, and other cities
designated by government ordinance).
“Major regional cities” refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has
deemed certain demand can be found for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value), rounded
down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the asset type includes the bookvalue of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.

7th fiscal period(as of Aug. 31, 2022)

8th fiscal period(as of Feb. 28, 2023)

Total liabilities

55,642

As a percentage of
total assets(%) (Note 2)
52.2

Total net assets
Total assets

50,910106,553

47.8
100.0

Amount(million yen) (Note 1)

55,315

As a percentage of
total assets(%) (Note 2)
52.3

50,512
105,828

47.7
100.0

Amount(million yen) (Note 1)(Note 1) Total liabilities, total net assets and total assets amounts are each based on the carrying amount, rounded down to the nearest million yen.
(Note 2) “As a percentage of total assets” is rounded to one decimal place.

- 25 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate as trust
assets; hereinafter, may be collectively referred to as the “portfolio assets”) as of February 28, 2023.

(A) Portfolio List
The property name, location, acquisition price, investment ratio, book value, appraisal value and acquisition date of theportfolio assets of SANKEI REAL ESTATE are as follows:
Acquisition priceAppraisal
Book value(Note 1)
Asset Property
value
Acquisition date
Property nameLocation
Investment (million yen) (million yen)type
number(Note 4)Price
(Note 2)
ratio
(Note 3)(million yen)(%)
Tokyo Sankei
Chiyoda-ku,
A-1
Building
2,509
2.6
2,615
2,620
Mar. 12, 2019Tokyo
(Note 5)Kita-ku,i. Mar. 12, 2019
BREEZÉ TOWER
A-2Osaka-shi,
13,10013.6
12,99518,000(Note 5)ii. Sept. 3, 2019
Osaka
S-GATENIHONBASHIChuo-ku,
A-3
6,698
6.9
6,653
7,750
Mar. 12, 2019
HONCHOTokyo(Note 5)
Chiyoda-ku,
A-4
S-GATE AKIHABARA
2,055
2.1
2,028
2,710
Mar. 12, 2019
Tokyo
Hibiya Sankei
Chiyoda-ku,
A-5
5,829
6.0
6,064
6,620
Mar. 12, 2019
Building
Tokyo
Hatchobori Sankei
Chuo-ku,
Office
A-6
4,959
5.1
5,003
5,490
Mar. 12, 2019
BuildingTokyobuildings
Koto-ku,A-7
Toyo Park Building
3,782
3.9
3,873
3,920
Mar. 12, 2019
Tokyo
Shinagawa Seaside Shinagawa-ku,
i. Sept. 3, 2019
A-8
20,94021.7
21,13019,450TS Tower (Note 5)Tokyo
ii. Sept. 2, 2021
Ota-ku,A-9
Omori Park Building
5,400
5.6
5,452
5,490
Sept. 3, 2019Tokyo
S-GATE AKASAKA
Minato-ku,
i. Oct. 1, 2020
A-10
5,600
5.8
5,631
5,992
(Note 5)
Tokyo
ii. Sept. 2, 2021
Miyamae-ku,
Miyazakidai Garden
A-11
Kawasaki-shi,
2,800
2.9
2,843
2,730
Sept. 2, 2021
OfficeKanagawa
Sawara-ku,
Hitachi Kyushu
A-12
Fukuoka-shi,
10,00010.3
10,197
10,300
Sept. 2, 2021
Building
Fukuoka
Subtotal-

83,674

86.6

84,48991,072-

B-1

Hotel Intergate
Tokyo Kyobashi

Chuo-ku,
Tokyo

8,961

9.3

8,897

9,040

Mar. 12, 2019

B-2

Hotel Intergate
Hiroshima

Naka-ku,
Hiroshima-shi,
Hiroshima

3,990

4.1

3,872

4,120

Sept. 3, 2019

Subtotal-

12,951

13.4

12,77013,160

-

Total

-

96,625100.0

97,259104,232-

Sub assets(Note 1) “Acquisition price” is the sale and purchase price of each real estate and trust beneficiary right stated in each sale and purchase agreement for the
portfolio assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax and thevarious expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each portfolio asset to the sum total
amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each portfolio asset as of February 28, 2023, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of February 28, 2023, stated in each real estate appraisal report. The appraisal of eachportfolio asset is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) “Acquisition date” is the acquisition date stated in each sale and purchase agreement for the portfolio assets.
(Note 5) The acquisition price, book value and appraisal value are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei Building” and 51%
for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 50% for “Shinagawa Seaside TS Tower,” and 80%
for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 26 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(B)

Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, lease and guarantee deposits, total leasable area, totalleased area and occupancy rate of the portfolio assets of SANKEI REAL ESTATE are as follows:
Lease and
Total rental
Total leasable
Total leased Occupancy
Construction
guarantee
Asset Property
revenue
area
area
rate
completion
deposits
Property name(million yen)
(m2)
(m2)
(%)
type number(million yen)
(Note 1)
(Note 2)
(Note 4)(Note 5)(Note 6)(Note 3)
Tokyo Sankei
A-1
Sept. 28, 2000
10187
881.69877.0999.5
Building(Note 7)BREEZÉ TOWER
A-2
July 1, 2008
972
870
12,146.02
10,974.15
90.4(Note 7)
S-GATENIHONBASHIA-3
Oct. 31, 2018
308
308
3,171.83
3,171.83
100.0
HONCHO(Note 7)
A-4
S-GATE AKIHABARA Sept. 29, 2017130
130
1,681.55
1,681.55
100.0
Hibiya Sankei
A-5
June 25, 1992
376
303
3,439.61
3,439.61
100.0
Building
OfficeHatchobori Sankei
A-6
Sept. 1, 1965
310
261
5,594.90
5,594.90
100.0
buildings
Building
A-7
Toyo Park Building June 18, 1991
189
172
4,224.52
3,897.52
92.3
Shinagawa Seaside
Not disclosed Not disclosed Not disclosed Not disclosed
A-8
July 25, 2003
76.0
TS Tower(Note 8)(Note 8)(Note 8)(Note 8)(Note 7, 9)
Omori Park
A-9
May 31, 1993
234
213
7,469.72
5,914.78
79.2
Building
S-GATE AKASAKA
Not disclosed Not disclosed
A-10
July 31, 2015
2,646.48
2,646.48
100.0(Note 7)(Note 8)(Note 8)Miyazakidai Garden
A-11
Feb. 4, 1993
153
144
3,687.53
3,687.53
100.0
OfficeHitachi Kyushu
Not disclosed Not disclosed
A-12
Feb. 29, 1996
26,513.33
26,513.33
100.0
Building(Note 8)(Note 8)Not disclosed Not disclosed
Subtotal (average)
4,298
3,522
92.2
(Note 8)(Note 8)
Hotel Intergate
Jan. 18, 2018
413
206
6,006.53
6,006.53
100.0
B-1
Tokyo Kyobashi
SubassetsHotel Intergate
Oct. 31, 2018
237
118
9,160.15
9,160.15
100.0
B-2
Hiroshima
Subtotal (average)
651
325
15,166.68
15,166.68
100.0
Not disclosed Not disclosed
Total (average)
4,949
3,848
93.4
(Note 8)(Note 8)(Note 1) “Construction completion” is the date of new construction completion stated in the registry of the main building for each portfolio asset. If there are
multiple main buildings, the date of the oldest building stated in the registry is indicated. As for “Shinagawa Seaside TS Tower,” the date of new
construction completion stated in the registry of the building with the building number 100-1-9 is indicated.
(Note 2) “Total rental revenue” is the amount calculated by annualizing the monthly rent (Only the rent for the rental accommodation, excluding usage fees forincidental parts such as warehouses that are not the main asset type, signboards, parking lots, etc., but including common service charges, etc. Free
rent and rent holiday (*1) will not be taken into consideration. As for rents that include floating rents in agreements with the tenants, the rents arecalculated without taking floating rents into consideration. Consumption tax, etc. are not included. The same shall apply hereinafter.) for the building
stated in the lease agreement for each portfolio asset effective as of February 28, 2023, rounded down to the nearest million yen. The amount calculatedby annualizing the monthly rent stated in the lease agreement concluded with the end tenant with respect to the portion in the pass-through-type
master lease agreement (*2) is indicated when a pass-through-type master lease agreement has been concluded for the portfolio assets.
(*1) “Free rent” refers to measures temporarily reducing rent or other amounts for mainly tenants newly moving in which temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc.
in this document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Lease and guarantee deposits” is the total amount of lease and guarantee deposits (including the amount expected to be received based on each leaseagreement, but excluding lease and guarantee deposits for incidental parts such as warehouses that are not the main asset type, signboards, parking
lots, etc.) based on the lease agreement for each portfolio asset as of February 28, 2023, rounded down to the nearest million yen. The amount of leasedeposits stated in the lease agreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement isindicated when a pass-through-type master lease agreement has been concluded for the portfolio assets.
(Note 4) “Total leasable area” is the area (excluding area of incidental parts such as warehouses that are not the main asset type, signboards, parking lots, etc.)
expected to be leasable based on the lease agreement, drawing, etc. of the buildings for each portfolio asset as of February 28, 2023, rounded down to
two decimal places.
(Note 5) “Total leased area” is the total leased area (excluding area of incidental parts such as warehouses that are not the main asset type, signboards, parking
lots, etc.) stated in the lease agreement (excluding lease agreements under which the lease period is yet to commence) for each portfolio asset as ofFebruary 28, 2023, rounded down to two decimal places. With respect to the portion which comes under the pass-through-type master leaseagreement, the total area for which the lease agreement has actually been concluded with the end tenant and for which the lease period hascommenced is indicated, rounded down to two decimal places.

- 27 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each portfolio asset as of February 28, 2023, rounded to one decimal place.
In addition, each subtotal and portfolio total figure is the ratio of the sum total of total leased area to the sum total of total leasable area for eachportfolio asset, rounded to one decimal place.
(Note 7) The total rental revenue, lease and guarantee deposits, total leasable area and total leased area are the figures equivalent to the co-ownership interest(2% for “Tokyo Sankei Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 50% for“Shinagawa Seaside TS Tower,” and 80% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.
(Note 8) Not disclosed due to unavoidable circumstances in that such contains information for which consent for disclosure has not been obtained from thetenant, relevant party, etc. or information from which confidential information can be derived.
(Note 9) An agreement has been reached with Sony Group Corporation for the termination of the contract for Shinagawa Seaside TS Tower with a termination
date of March 31, 2023 (14 floors).

- 28 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(C) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa Sōgō
Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and the AssetManagement Company with the appraisal of the portfolio assets of SANKEI REAL ESTATE. The concerned real estateappraisal reports are the appraising appraisal company’s judgment and opinion at a certain point in time and are not aguarantee of the validity or accuracy of the content thereof, possibility of transaction at the concerned appraisal value, etc.
Furthermore, there is no special vested interest between Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd.
or Daiwa Real Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management Company.
Overview of appraisal report

Asset
type

Property
Property namenumber

A-1

A-2

A-3

A-4
A-5
A-6
Officebuildings

A-7

A-8

A-9
A-10

A-11

A-12

Tokyo Sankei
Building(Note 2)BREEZÉ
TOWER(Note 2)S-GATENIHONBASHI-HONCHO(Note 2)S-GATEAKIHABARA
Hibiya Sankei
Building
Hatchobori
Sankei
Building
Toyo Park
Building
ShinagawaSeaside TS
Tower(Note 2)
Omori Park
Building
S-GATEAKASAKA(Note 2)Miyazakidai
GardenOfficeHitachi
KyushuBuilding

Appraiser

Japan Real
Estate Institute

2,620

2,660

2.3

2,580

2.0

2.4

2,750

Japan Real
Estate Institute18,00018,1803.6

17,8203.2

3.8

15,930Japan Real
Estate Institute

7,750

7,890

3.2

7,600

2.9

3.4

6,550

2,710

2,720

3.3

2,690

3.1

3.4

2,410

6,620

6,700

2.8

6,530

2.6

2.9

7,140

5,490

5,660

4.1

5,410

4.2

4.3

5,640

3,920

3,960

3.7

3,870

3.5

3.8

2,990

The Tanizawa
Sōgō Appraisal
Co., Ltd.

19,45021,1003.3

18,750

3.4

3.5

20,500Japan Real
Estate Institute

5,490

5,540

3.7

5,430

3.5

3.8

5,500

Japan Real
Estate Institute

5,992

6,064

3.1

5,912

2.9

3.2

5,328

Japan Real
Estate Institute

2,730

2,750

4.5

2,700

4.3

4.6

2,330

Japan Real
Estate Institute10,30010,400

4.3

10,200

4.1

4.4

12,20091,072

93,624-89,492--

89,268Daiwa Real
EstateAppraisal Co.,
Ltd.

9,040

9,170

3.8

8,990

3.6

4.0

8,780

Japan Real
Estate Institute

4,120

4,160

4.6

4,080

4.4

4.8

4,430

Subtotal

13,16013,330-13,070--13,210Total

104,232

106,954-

102,562--

102,478

Japan Real
Estate InstituteJapan Real
Estate Institute
The Tanizawa
Sōgō Appraisal
Co., Ltd.
Japan Real
Estate InstituteSubtotal
B-1
Sub
assetsB-2

Direct capitalization
DCF method
methodIndicated
Appraisalvalue by
Indicated
Indicated
value
cost
value by(million yen) value by
Discount Terminal
approachincome Cap rate income(Note 1)rate
cap rate(million
approach(%)
approach
(%)
(%)
yen)
(million(million
yen)
yen)

Hotel
IntergateTokyo
Kyobashi
HotelIntergate
Hiroshima(Note 1) “Appraisal value” is the appraisal value with an appraisal date of February 28, 2023, stated in each real estate appraisal report.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach basedon DCF method and indicated value by cost approach are the figures equivalent to the co-ownership interest (2% for “Tokyo Sankei
Building” and 51% for “S-GATE NIHONBASHI-HONCHO”) and the quasi co-ownership interest (45% for “BREEZÉ TOWER,” 50% for“Shinagawa Seaside TS Tower,” and 80% for “S-GATE AKASAKA”) held by SANKEI REAL ESTATE.

- 29 -SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
(2) Capital Expenditures for Real Estate Heldi. Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as ofFebruary 28, 2023, the following are the major estimated amounts (10 million yen or more). The estimated construction
costs below may include the portion separately charged to expenses in accounting

Name of real estate, etc.
(Location)

Expected construction cost
(million yen)Amount of
Total
Total
payment
amountamountduringalready
periodpaid

PurposeScheduled period

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update and maintenance of
air conditioner AHU parts

From: Mar. 1, 2023
To: Mar. 31, 2023

10

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Replacement of tile carpet in
office common area

From: Mar. 1, 2023
To: Mar. 31, 2023

10

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of blind system

From: Mar. 1, 2023
To: Mar. 31, 2023

17

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Dividing work of exclusive
area on 17F

From: Mar. 1, 2023
To: Apr. 30, 2023

30

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Conversion to LED lighting

From: Sept. 1, 2023
To: Sept. 30, 2023

35

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of power receiving
and transforming facilities
and equipment

From: Feb. 1, 2024
To: Feb. 29, 2024

10

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of security facilities

From: Feb. 1, 2024
To: Feb. 29, 2024

13

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update and maintenance of
air-conditioning system

From: Feb. 1, 2024
To: Feb. 29, 2024

31

-

-

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of blind system

From: Feb. 1, 2024
To: Feb. 29, 2024

67

-

-

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Replacement of SP pump

From: Nov. 1, 2023
To: Nov. 30, 2023

24

-

-

Hibiya Sankei Building(Chiyoda-ku, Tokyo)

Maintenance of mechanicalcar parking system

From: Jan. 1, 2024
To: Jan. 31, 2024

11

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Common area renewal work

From: Jun. 1, 2023
To: Jun. 30, 2023

120

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Repair of emergency
generator

From: Oct. 1, 2023
To: Oct. 31, 2023

16

-

-

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of emergency
broadcasting system

From: Feb. 1, 2024
To: Feb. 29, 2024

18

-

-

Omori Park Building(Ota-ku, Tokyo)

Update of battery facilities

From: Oct. 1, 2023
To: Oct. 31, 2023

16

-

-

Omori Park Building(Ota-ku, Tokyo)

Repair of individual airconditioning system

From: Dec. 1, 2023
To: Dec. 31, 2023

16

-

-

Miyazakidai Garden Office(Miyamae-ku, Kawasaki-shi)Toilet renovation work

From: Jan. 1, 2024
To: Jan. 31, 2024

11

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)Toilet renovation work

From: Aug. 1, 2023
To: Aug. 31, 2023

18

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)

Vacuum Circuit Breaker (VCB)
update work

From: Nov. 1, 2023
To: Nov. 30, 2023

12

-

-

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)

Update work on district
heating and cooling facilities

From: Jan. 1, 2024

23

-

-

- 30 -

To: Jan. 31, 2024

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended February 2023
ii.

Capital Expenditures during the Fiscal Period
Major construction works falling under the category of capital expenditures of 10 million yen or more conducted in the fiscal
period under review for assets held by SANKEI REAL ESTATE as of February 28, 2023, are as follows: For the fiscal period underreview, capital expenditures amounted to 212 million yen and repair expenses separately charged to expenses amounted to
271 million yen for a combined total of 483 million yen of construction works implemented.

Name of real estate, etc.
(Location)

Amount of payment(million yen)

Purpose

PeriodBREEZÉ TOWER(Kita-ku, Osaka-shi)

Conversion to LED lighting forleased space

From: Sept. 1, 2022
To: Oct. 31, 2022

16

BREEZÉ TOWER(Kita-ku, Osaka-shi)

Update of blind system

From: Sept. 1, 2022
To: Dec. 27, 2022

14

Shinagawa Seaside TS Tower(Shinagawa-ku, Tokyo)

Update of automatic fire
detection equipment

From: Sept. 1, 2022
To: Oct. 31, 2022

61

Omori Park Building(Ota-ku, Tokyo)

Repair of individual airconditioning system on 7F

From: Dec. 3, 2022
To: Jan. 5, 2023

16

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)Toilet renovation work

From: Sept. 10, 2022
To: Oct. 8, 2022

10

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)Toilet renovation work

From: Jan. 6, 2023
To: Feb. 8, 2023

10

Hitachi Kyushu Building(Sawara-ku, Fukuoka-shi)

Vacuum Circuit Breaker (VCB)
update work

From: Nov. 1, 2022
To: Feb. 13, 2023

11

iii.

Other

72

Total

212

Cash Reserves for Long-Term Repair Plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following
provision of reserve for repairs from cash flows during the fiscal period for the purpose of allocating to medium- to long-term
future large-scale repairs and other funds.

Business period
Balance of reserve at
beginning of period(thousand yen)
Provision of reserve
during period(thousand yen)
Reversal of reserve
during period(thousand yen)
Reserve carriedforward(thousand yen)

4th fiscal period
From: Sept. 1, 2020
To: Feb. 28, 2021

5th fiscal period
From: Mar. 1, 2021
To: Aug. 31, 2021

6th fiscal period
From: Sept. 1, 2021
To: Feb. 28, 2022

7th fiscal period
From: Mar. 1, 2022
To: Aug. 31, 2022

8h fiscal period
From: Sept. 1, 2022
To: Feb. 28, 2023

217,842

175,880

209,678

262,349

303,132

59,29359,29385,56759,80159,801

101,255

25,49632,89519,01938,448

175,880

209,678

262,349

303,132

324,485- 31 -